http://forextradingseminar.com This lesson reveals 2 of the most common sources of confusion experienced by most Forex traders. Discover how to avoid being deceived by the hype and dazzle in the Forex industry.

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The article which you are about to read has been written because of a growing interest in Forex Trading, and I want to try and answer some of the questions currently being asked.

Almost all entrepreneurs have heard of the term day trading system. Of course, the name trading is not at all too far from the facts of Forex trading or New York Stock Exchange. There have been many claims that the Forex trading is nowadays the best day trading system to get engaged with. So, what is it with the Forex trading that it has been branded as the best day trading system in the world?

In the strictest sense, Forex trading does not deal with stocks. It is all about the trade of currencies. The largely involved world currencies are the dollar, Euro, yen, Swiss franc, and the British pound. The Forex trading system is likewise the largest in volume when compared to the bond and the stock markets combined together. Trading of currencies may be labeled with a high risk. But then it can also mean high returns in a span of minutes!

The Forex trading is done in a complete 24 hour period. And the rates of the currencies also keep fluctuating. The best thing about Forex trading is that it can be applied with the margin method. Meaning, the investor need not raise the full amount of money just so he can buy one currency. For example, a Forex investor can actually purchase $100,000.00 even if he only has an available of $1,000.00. It is one of the most attractive points of the trade, that the investor can create large profits even with only some minimum investments. Another thing is, the Forex market is relatively open to all sorts of investors aside from banks and large organizations.

When an investor like you places great interest on the Forex trading market, the best place to start your search is in the Forex community. With the decision of joining the Forex market comes the vital role of research. It is important that you do not confine yourself to one source only. It pays off to do a thorough research on the matter before finally plunging into the business.

After all, if you do intend to get a clear understanding of the ropes of the Forex trading system, you need to dissect every piece of information you come across with. Keeping posted with the latest in the community boards and Forex forums is extremely helpful.

Now before you read any further I just want to jump in here and say that I do hope that you are finding this helpful and informatitive, because this is the reason for my writing. So, having said that, lets continue.

After a careful research, the next thing for you to find out is the best system that you can make use of. What is a system all about? How beneficial would it be for you? Generally, a system is a kind of method, course, or software which has been specially designed by the experts in Forex trading. There are also multiple types of systems developed and sold out there. Again, you will need to research about one system which will suitably fit your intention in the trading industry. Before you purchase a system, better inquire from the vendor some questions regarding how it works, how long has it been in existence, and if they can offer you a free trial version. Also ensure that you get to encounter some testimonials from the customers about the system you are looking into.

Participating in online discussions will also give you an idea as to the systems which the other Forex traders are using. Above all, you will also need a qualified broker who can guide you through the transaction you partake in. Strategy also plays a major role. It is through a carefully planned out strategy that Forex trading can indeed become the best day trading system.

Let me finish by saying that there is a lot of information out there on this subject just waiting for you to research. You could try your local bookstore, your library, my Blog, or the internet.

Use of softwares, charting tools might have made trading in forex simpler than ever before. But there is always an element of risk that one increasingly tends to ignore the warning signals the charting tools give out some times crying for attention. If you are alert you can pick-up a signal from literally any chart or an indicator regardless of whether your software is online or desktop application.

In the following paragraphs let us discuss some critical warning signals and ways to pick them up as and when they show.

Overbought Condition
This is a very important warning signal in a trading condition, if not in delivery buyouts. There are a number of ways and indicators that you may look for this signal from. The most common of them is the RSI or the relative Strength Index, William %R or when MACD falls below the signal line. When RSI and W%R are at 20% on the lower side and 80% on the other or beyond these values exit short and long positions.

52 Week High and 52 Week Low
In most of the cases currency prices often fail to breach its own 52 week crest or trough. Not exiting from long positions near the 52 week high peak or from short position near 52 week low could be a fatal mistake unless you have seen other strong fundamental parameter working in the currencies’ favor. The 52 week range theory holds well because as a currency nears its peak or bottom the currency will be either over bought or over sold and at the same time market sentiment weakens thus reversing the trend.

Rate of Change- ROC
The ROC oscillator plots the difference in prices between the current and x days ago. This x number is usually taken as 10 days which gives good signals. As the price rises ROC too rises and when it falls ROC falls too. ROC is plotted across a mean (zero) line and higher or lower the values greater are the chances for the prices to have been over bought or sold and a steep reversal in its trend.

Stochastic
Stochastic oscillator gives signals of warning in many ways: Close short positions when the oscillators are near or below 20% and long positions near or above 80%. But this is pretty simplistic approach, so a forex trader needs to look for price-oscillator divergence also which when occur indicate a strong trend reversal.

Fundamental Changes
Natural calamities, war, governmental policy changes etc render economies weakened and currencies take a jolt as a result.

There are many more warning signals for the taking and a seasoned forex trader will always look for them before she or he enters into a position.

This year my single-member LLC has begun trading stocks as well as currencies (Forex). The initial money came from my Dad in which we agreed that my business would pay him a flat 10% return on his money and I'd get to keep anything I generate above that.

How does (or does it) need to be reported when I file my taxes next year?

1) Do I need to report the initial amount even though its not really my money and certainly isn't profit?

2) How do I report that the money that I pay him every year isn't part of my taxable income? Can I just report the amount and interest and write it off?

3) I have electronic records for all trades – how much detail need to be given the IRS? All trades or summary?

PS – I'd consider paying a professional, but since my gains will be pretty low, I'd hate to pay most of it to someone to file my taxes. Does anyone know of any good online sources to find tax preparers? I'm sure there a number out there that'd be happy to make some $ in their spare time.
In response to the comments about the LLC – first off, in Georgia (where I'm incorporated) we only have to pay a $30/year fee so that's not a big deal like it is in California (although couldn't you just register in Deleware/Nevada and pay a Registered Agent fee?)

Also, I have some other smaller income sources that the LLC gets used for and its a lot better than my old S Corp where I had to file quarterly forms, have meetings, figure out what income I should have, etc. etc.

I certainly could be wrong – it might be better to not be incorporated at all, but it was appealing to be able to report losses > $3000 (hopefully I'll never have to report that), the ability to change structure to a full Corporation/S Corp if needed later (whereas you can't change to an LLC from Corp), etc.

I can't agree more with the previous answer. Why in God's world did you go with LLC? What liability are you trying to prevent? Who is going to sue you for an investment gone wrong, your father? Some states, like California, tax a minimum of $800 per year for an LLC regardless if it makes or loses money. Please reconsider this election immediately.

As far as the loan to you, no tax reporting. As you pay it back, however, you will report the interest (not the principal) as a deduction on Sch C (Interest paid to Other line 16b).

As for your status as a trader, the tax reporting can vary depending on whether you claim trader status. If you are a trader who has not made the mark-to-market election, your capital gains and losses from trading go on Schedule D, the same as gains and losses from investing. Trading expenses go on Schedule C, which means you'll show a loss on that form. This makes the IRS nervous, so attach a statement to Schedule C explaining that gains are on Schedule D. The statement should also quantify your net trading gain.

If you ARE using mark-to-market accounting, you should report all your trading gains and losses on Part II of 4797 and attach a statement to Schedule C, as explained in the preceding paragraph.

The following link will explain this much better detail.

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http://www.forexebookstore.com Forex Trading and information.

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I am very new to investment. But since I have strong interest in the financial market, I decided to use $500 (the amount I can let go if I fail) and lean from actual trading…

… OK, I really want to make some money.

I thought I would do stocks, but since I have to pay $10-13 commission through online brokers, $500 initial deposit will go away pretty soon. And I want to start making money fast. So, I am now thinking about foreign exchange.

There are terms that I do not know. Would you please explain what Spreads and Pips are?

If I use online trading like FXCM for USDJPY, how much are they going to charge?

Which currency has the most return (most risk)?

I want to know your experiences.

I know I sound stupid because I do not know anything. I am sure many of you will say to put the money in CD or mutual fund. But I am looking for a way to make money instantly.

Thanks for your help!

I first want to commend you for already realizing one of the most important elements in trading Forex…..only risk money that you can afford to lose.

A few of my students are using micro accounts with GFT and this may be perfect for an account the size of yours.

I like to utilize conservative strategies that reduce market risks, generate an interest payment everyday and minimize the amount of time it takes to manage one's account (about 30 minutes per week).

I have two suggestions for you….first spend some time at babypips.com for some very good Forex information presented in a very enjoyable format. Second, I would be happy to send you an investment guide that will explain a couple of the strategies that I use. Just drop me an email.

Best wishes for your success.

Paul Upp
(925) 236-1839

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